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Fire
& Rain
“Been walking my mind to an easy time my back turned towards the sun
Lord knows when the cold wind blows it'll turn your head around
Well, there's hours of time on the telephone line to talk about things to come
Sweet dreams and flying machines in pieces on the ground
Oh, I've seen fire and I've seen rain
I've seen sunny days that I thought would never end
I've seen lonely times when I could not find a friend
But I always thought that I'd see you, baby, one more time again.”
(Excerpted from “Fire and Rain” written and performed by James Taylor)
In light of recent and ongoing world events those lyrics have been rolling around in my mind. It’s Halloween night and there’s a full moon, the end of October, three in the morning, and here I am sitting at the word processor putting thoughts into words. Regardless, it is important to stop and realize that the retail automobile industry was already in deep trouble before the events of September 11th. In other words, don’t blame everything on the war. If you’ll recall the manufacturers were already announcing plant closings and Ford had already announced axing 5000 white collar employees long before the World Trade Center incident occurred.
Zero interest rate auto loans have temporarily re-ignited the market and we are seeing near record sales. However, I suspect by the time you read this we will already be paying the price for the future sales we stole from December and January way back in October and November. I believe this war is going to drag on and terrorism attacks are going to affect the public psyche. The bottom line is that we’re all going to have get better than we’ve been in the past just to stay where we used to be. If you are going to do business in this current economic climate, you have to be prepared to take that business away from a competitor. In other words, now is the time to get your Battle Plan together. Most dealerships are not adequately prepared to handle a highly competitive market. Most of the young managers working in dealerships today have never faced the erratic and wildly fluctuating market conditions that lie ahead. Personally, if I owned your dealership, my strategy would be to aggressively attack the market. Cost cutting only works once (ask Nasser). There’s only so much cancer you can cut out before you start cutting out vital organs. There’s no situation on Earth you can’t sell your way out of.
This is the time to examine your business processes and your sales processes…this is the time to train and retrain your existing sales people and managers. This is especially the time to take a realistic look at the quality of the people you are putting in front of the public...and to get rid of the bad ones.
In Atlanta where I live, Delta Airlines just announced major layoffs. Every day in every city you read about corporations down-sizing and getting rid of people. There has never been a better time in recent memory for car dealers to recruit, hire and train the best quality new people.
Speaking of Zero Interest auto loans…I just bought a new 2002 Cadillac Escalade. If you might recall, I just bought a 2002 Escalade back in March. Well, last week I was sitting around playing with the numbers and I realized that I would save more than $13,000 dollars in payments and interest by buying a brand new Escalade at zero interest…even though my “old one” only had 10,000 miles on it. I’ve got many of the dealers I work with calling customers who bought cars less than a year ago at conventional rates and trading them into a new one just like it with zero miles and a fresh warranty starting over. We have the math worked out in advance and we can show them the new zero interest deal immediately…prefigured with the trade, showing them real savings.
The real casualty of zero interest is definitely going to be used car values. Coupled with several converging situations, first of all the rental car companies have begun selling their program cars back to the factories early…coupled with the fact that manufacturers are starting to dump a lot of excess late-model inventory into the market. This will continue through the end of the year into the first quarter (Daimler-Chrysler be very careful). Now, zero interest loans on new cars have already suppressed used car values in advance of this glut of inventory that is already starting to arrive into the retail arena. My advice to my dealers is to get your inventory in order. Don’t holding onto bad inventory hoping to sell your way out of water. Take short losses when appropriate. The biggest advice I am giving my dealers is to put a “Drop Dead” 45-day turn on used cars. On a car’s 45th birthday it’s either down the road or it’s at the auction, no exceptions. Usually I recommend a 60-day turn but the market is going to be too unpredictable in the short term.
Well sports fans…it seems like everything I’ve been writing about for the last five years is finally making it into the pages of more conservative publications. Knock me over with a feather…I was reading the editorial page of Automotive Snooze and there it was, October 15th edition, page 12… “The Explorer is no more likely to tip over than other sport utilities during a tire separation. But, the Explorer was more likely to have a tire separation. That may be Firestone’s fault. But it’s also the fault of Ford, which apparently bought those tires based on price, not performance.” Excuse me, didn’t I say the same thing over and over again in issue after issue all of last year?In August of 2000 I wrote an article in this magazine titled High Noon, which featured six long paragraphs about Firestone tires, Ford Explorers and Jac Nasser’s role in the ongoing drama. Here is a partial quote of what I said then… "Jac the Knife" has squeezed the suppliers to the bone…I believe he’s pushed too far and I’ve said so repeatedly in issue after issue. Quality has suffered and the lives of Ford’s customers have been put at risk. Ford Motor Company’s motto may have to be changed to "Quality Used To Be Job One". With so many millions of cars recalled for major safety and quality problems, it is obvious to me that this is the effect of Nasser’s cost cutting and squeezing the suppliers to take short cuts. Ford Dealers have a right to be indignant at a company who is trying to penalize them financially for customer satisfaction issues when the quality of their product is diving deeper into the dumper every day. Is Firestone just another supplier who took shortcuts trying to survive the tyranny of "Jac the Knife"?
Hey, did you see where Mary Connelly at Automotive News wrote a front-page expose a week before Jac bit the big one titled “Where Jacques Nasser went wrong”?
Wow! I am so impressed to see Auto Snooze taking such an aggressive stance on the subject. The article was about 6 mistakes Nasser made in running Ford (into the ground?)
“Hit the Road Jacques…and don’t you come back no more…no more…no more.” (Lyrics courtesy of Mr. Ray Charles who has never actually seen Jacques Nasser.)
Surprise…surprise. It would appear that Billy Ford just dropkicked our little buddy, Jacques Nasser through the field goals. (The Knife got the Axe) Is it just me, or did Billy appear to be smirking when he made the announcement? I knew that eventually Billy was going to take a testosterone injection and make a muscle. Of course those rumors that Jac and Billy despised each other’s guts were totally absurd. (wink-wink) Of course, I was all over this story here in this magazine way back before July when the decision was actually made, long before Jerry Flint or any of the other columnists gave it any ink at all. The only thing about the way it went down that really pissed me off is that I had October 18th and November 3rd in the Jacques Nasser office pool. Maybe I will do better in the Brian Kelley pool or the Martin Inglis pool. (Lord knows I’ve already lost a fortune in the Ron Zarella pool.) …I should have got in on the Jason Vines pool. Did you see the letter Jason wrote to Auto Snooze praising Nasser just days before the axe fell? Jason’s letter has raised the bar on what the word “Suck-Up” will mean for future generations of factory guys (gals). Of course Jason is now also an unemployment statistic. Personally, If I was Martin Inglis I might consider making a late-night trip to Kinko Copy and get maybe a couple dozen copies of my resume’ updated.
Now, after months of pointing it out repeatedly in issue after issue of this magazine, everyone else is now starting to realize I was right…100% right. I have always been right on this subject. What in the hell were these people thinking?
I predicted exactly what was going to happen with the Auto Collections as it was going down. I also accurately predicted every negative issue now facing Ford Motor Company; the monumental losses, corporate disgrace, recalls, poor quality, lawsuits, lost market share, and mismanagement …all of this I predicted in advance, as it unfolded. Other writers and reporters chose to analyze these failures safely after the fact. Me, I took a stand in print light years ahead of the other media.
I was all over it, predicting staggering Internet initiative losses the factories were destined to incur (GM and Ford)…as well as the blatant obvious absurdity of what I perceived to be Nasser’s deluded egomaniacal Napoleonic marketing vision. I told you he was history first.
Hey, howsabout this guy Brian Kelley? They called him a “Whiz Kid”. Does that mean Lincoln-Mercury is about to take a Whiz? You know Brian was in charge of the Auto Collections and was Jac’s handpicked boy (man?) hired to implement all of those dazzling profitable e-commerce initiatives we’ve seen at Ford over the last three years. Young Brian came to us from the Electric Appliance Division of General Electric Corporation. Come-on people, lighten up, Electric Toasters and Lincoln Town Cars, what the hell, its all the same thing isn’t it? Big deal! Let’s make Brain president of Lincoln-Mercury? He’s appears qualified; after all he was in charge of the Auto Collections (looks great on his resume’). And I’ll bet you thought Brian wasn’t a real Car Man. So after he gets finished helping Jacques pack up his office he’s off to California.
I know many Lincoln-Mercury dealers are excited (jumping up and down) to hear Brian’s now in the driver’s seat. On a personal note, I am truly sorry and ashamed to admit that I was jokingly referring to Mr. Kelley as “Opie” last year in several of my columns. I am also sorry that I might have made jokes inferring that he might be a geek or a propeller-head. At the time I never suspected in my wildest dreams that anyone would ever give him any real authority or meaningful responsibility. Truthfully, I still think there is still a strong possibility Brian might be “Super-Sizing” French fries somewhere before year-end.
By the way, was it just my imagination or did the e-commerce initiatives and the Auto Collections just take another $200 million dollar dump showing up on Ford’s most recent financials. Oh what the heck, we’ll just lump it in with the $3 Billion Firestone losses…nobody will notice. Hey kids…can you say $692 million third-quarter net loss? Hey, cheer up…tell the board members that we can always sell another $7.5 billion in bonds, there’s other ways besides selling cars and trucks to raise cash. Thanks Jacques, your leadership was an inspiration to all of us. You were certainly worth the $17 million or more you were earning annually.
I have the greatest respect for Mary Connelly as a friend and a journalist BUT I have to say every point she wrote about the failures of Jac Nasser were things I had specifically predicted and written about months ago, even years ago, in the pages of this magazine.
The incoming chairman of the National Ford Dealer Council, Ralph Seekins just issued to Ford a blistering 14-page memo setting the agenda for Factory-Dealer relations. In part he was calling for Ford to drop Blue Oval Certification and restore the 1% to the invoice that they took away from the dealers to fund it. This guy appears to have balls. He strikes me as the kind of guy that will never suck up or sell out to the factory or double-cross his fellow dealers for personal gain. Now, isn’t that a breath of fresh air?
His memo went on to say, in part, “Suppliers have been squeezed too hard and too fast and, as a result Ford is now getting exactly what it pays for- a lower quality component.” Whoa big fella…isn’t that exactly what I have been writing about here for the last five years? His memo was compiled from a survey conducted with Ford Dealers. One thing the dealers did ask for in the memo was that Jim O’Connor be empowered with more authority. Everyone likes O’Connor and everyone trusts O’Connor. (Including me) Jim O’Connor is underutilized...he is much more qualified than his current level. If Bill Ford and Nick Scheele really have wisdom and insight they will promote this man to a position where he can make autonomous meaningful policy changes.
It appears to me that General Motors and Daimler-Chrysler are making a genuine effort to improve Factory-Dealer relations BUT it also appears to me that Ford has steadfastly stuck with their eternal belligerent, arrogant posture. (Up until now anyway) When are these people going to get it? It appears to me that, until now, the message from Ford to the dealers continues to be… “ Although, we really want to improve relationships with our dealers, we don’t intend to change any of the rotten mean despicable things we’re doing, we just want you to like us anyway. We (Ford Motor Company) intend to keep on rubbing your noses in it but we really wish you would start to like it. This is our first primary, most-important, number one priority.” Now, I predict that we are going to see Ford trying to find a graceful way out of this Blue Ovulation Certification debacle they’ve created. We are already seeing dealers being decertified for any number of questionable reasons. (I told you so) According to an article I just read on Dealer’s Edge, it appears two Ford dealers were decertified and lost their Blue Oval status as a result of a factory audit. Personally, I am looking for the recertification standards to be raised beyond attainability within the next few years. (Oxymoron: factory promises)
Whatever the case, you can bet your butt that there is no way that they will continue to make these payments to their dealers for much longer in light of cash position and market share problems.
Dear Bill Ford, Nick Scheele and Jim O’Connor: This is an incredible opportunity. The door is open wide, right now, to fully restore Ford Dealers’ enthusiasm. Your dealers are never-ever going to trust you again unless and until you dismantle the Blue Evil Certification ambush, restore their stolen profit margins (opinion), abandon mandatory (goofy) Internet initiatives, stop all factory funded legal actions against state dealer-protective franchise laws, and stop interfering in the retail sales process. Nick Scheele is right. The company has lost sight of the fact that Ford Motor Company is in business to build safe, quality cars and trucks and get them to Ford dealers in a timely fashion. Jacques Nasser was never totally to blame. If I had to point a finger it would be aimed directly at Sir Alex Trotman…and then at the board themselves. How on Earth could the company have stood by with their thumbs in a precarious position and allowed these blatantly asinine excesses to continue for nearly a decade? I have written about that repeatedly.
Talk about impressive. The Koreans are coming on strong. Hyundai and Kia are gaining market share in quantum leaps. They are up somewhere above 36% over last year. Remember I said this “The Korean manufacturers are going to be as powerful a force in the market as the Japanese have been for the last two decades.” I predict their quality and image will continue to improve which will drive increased market share away from the Japanese.
On the other hand…I can realistically see General Motors regaining some semblance of market dominance despite the Zarella handicap. (Personal perception based on track record) There is a lot of good product in the tubes with the exception of Opel-based cars. The new Cadillac CTS is going to be incredible. Bob Lutz’s insight and energy is contagious. Where Ford product has become uninspired, dull and unimaginative, General Motors appears to be charging ahead and tearing down the old guard bureaucracy that kills innovation and creative thinking. It is not inconceivable that General Motors might climb to 35% market share in the next two or three years.
Still, General Motors has to get back to the basics of blocking and tackling. Like Ford Motor Company, General Motors has been inundated with inept, inbred, incompetent, non-car-people unsuccessfully trying to reinvent the industry. I think you guys threw Oldsmobile to the wolves while trying to save Saturn Division in spite of mind boggling, staggering losses at Saturn approaching a billion dollars annually since day one. (God knows why).
They have, in my opinion, fallen under the spell of the same allegedly bogus, seemingly misguided J. D. Power and Associates perceived misinformation and warm and fuzzy bullcrap that I personally believe is dragging the industry down into the toilet. Like Ford, General Motors needs to get out of retail. Stop interfering with your dealers and the selling process…stick to your core business.
Take the Wes Rydell-General Motors joint-venture disgrace in the San Fernando Valley for example. (Opinion) …Yes Veronica, it appears General Motors is still operating stores in direct competition with their loyal dealers in Southern California. While our boy Zarella keeps mouthing pious platitudes in flowery tirades of oratory flatulence about “Brand Equity” and “Brand Dynamics” my other little buddy from the frozen tundra, Wes Rydell, continues to advertise prime General Motors merchandise deep into the holdback …example… $8000 off on Suburban, Yukon XL, or Cadillac Escalade. (I have said before that if you blur your eyes you might picture Wes (or Zarella?) standing on a street corner under a street lamp wearing fishnet hose)
The factory has subsidized, given preferential treatment to, and synergistically advantagized the Rydell-Factory joint venture. (my opinion-classic double-cross) Still, in spite of unfair direct competition and blatant prostituting of the product in the market, the other General Motors dealers in the San Fernando Valley appear to have actually increased market share more than the Rydell Stores. (Six prime locations) Originally, General Motors’ excuse for this shameful scenario was that it was an experiment to increase General Motors’ market share in Southern California. Reviewing their own numbers it appears to me that they have not successfully increased market share one full percentage point in spite of all of their apparently despicable and dishonorable tactics. In spite of a stacked deck, it appears to me Rydell has only succeeded in taking legitimate profits away from fully invested, loyal General Motors Dealers. They have not taken away market share from any of the competitors. They (General Motors) have given Rydell unfair advantage in that they have allowed him to synergistically run his operations there with one accounting office, one parts department, and one computer system with subsidized “market-value rent factor” (bullcrap). It would be illegal and a franchise violation for any legitimate dealer to attempt to do that. I even heard that originally at one time they even gave the Rydell stores their own GMAC branch. Of course all of this is just my personal opinion based upon common decency and the facts as I interpret them…I could be wrong.
Newsflash! I have really been too hard on J.D. Power and Associates in recent months and maybe I should take a moment here to apologize. I could have conceivably insinuated that I personally think they are less than reputable and their alleged research is anti-dealer, biased, slanted, preconceived, blatantly communist and worthless. Perhaps I might have even mistakenly used the word “bogus” on occasion in reference to J.D. Power and Associates’ ethics. (Another oxymoron?)
A little blurb in a recent article hit me as being a little funny…it said that the Pontiac Aztek had won a beauty contest…sort of. Well, I had to read on. It seems that the Pontiac Aztek rated at the very top of the very top in J.D. Power and Associates recent prestigious (barf) awards in the category of performance-execution- and layout. I am talking the most prestigious glass trophy money can buy. You see I had accidentally and evidently erroneously gotten the false impression that the Pontiac Aztek was actually one bastardized, goofy-looking, ugly son-of-a-bitch. I would like to apologize and thank J.D. Power and Associates for pointing out that; evidently, their research has proven beyond a shadow of a doubt that most people actually believe the Aztek is beautiful. I humbly stand corrected.
In a related story…(Oh doesn’t that sound journalistic?) In a related story I see where Aztek just got the government’s highest rollover rating, four out of five stars. That is the best score given to any SUV ever. Of course, I already knew that. As a matter of fact I have gone so far as to say that Aztek is the safest SUV in history. How could anyone possibly be killed or injured in a Pontiac Aztek when nobody seems to be buying or driving the allegedly ugly little suckers? Somebody’s got to be driving one to get hurt in one. What are the odds of that happening?
Hello-ooo-ooo! (Echo) Is anybody in here? Hello-ooo-ooo! It’s just me looking for all of those missing Dot-Coms. I guess those suckers are almost all “Dot-Gone”. Who would have thought that? Another “Wave of the Future” that fell short of the beach. When are these morons going to go away and let us sell cars?
Of course my old favorite, AutoByTel is still around. Their stock is now up to almost a buck-and-a-half a share as I write these words. They’ve been sending out press releases every quarter saying they expect to be profitable for the first time…soon. Of course I didn’t think anybody would be dumb enough to bite on that one (based on my low opinion concerning the credibility of AutoByTel). I should have realized General Motors was a prime candidate to partner up with them in a joint venture trial experiment in the Washington D.C. metro market. Well, they’ve evidently extended that alleged experiment which, according to my sources, appears to have had already become a dismal sloppy abortion even before the WTC incident. I have had some great conversations with participating and surrounding dealers. Of course I want you to remember what I am saying here…I think General Motors’ “Spin Doctors” are going to find some way to try to say they are having a great success here.
Am I delusionary or did I not read where they only sold something like 1.6% of the General Motors sales in that market through this project? I could swear that I also read they have blown a tremendous budget advertising this alleged fiasco. Maybe I am experiencing a touch of
Alzheimer's or something.
Excuse me, I’m just a high-school graduate from Jacksonville but do those figures seem to really suck big-time or what? My figures must be wrong, I am sure they’ve actually sold probably somewhere around 90% of all General Motors sales in the Washington market through this program…or at least that’s the way I expect the reports to come out after General Motors and AutoByTel get through editing them. They might even get J.D. Power and Associates to survey the results. That would almost certainly assure 100% penetration. Of course, I might be wrong.
Needless to say the war is going to change everything. We have to be more on top of our business than at any other time in memory. Twenty-five years in the industry I have endured wars and recessions and product shortages. Those people who have brought death and destruction to our homeland will pay a heavier price than they could have ever possibly dreamed. I have seen our country come together as a result. The best answer is to continue to do business aggressively. I think we’ve all seen Fire and Rain.
More Food For Thought
(Ziegler is speaking at the NADA Convention)
Last week I flew from Atlanta to Las Vegas where I spent two days working with one of the premier NCM 20-groups…then I flew from Vegas to Nassau Bahamas to be the keynote speaker for the Pennsylvania Auto dealers annual convention…from Nassau I flew directly to Phoenix where I gave a keynote speech for an audience of more than 600 attendees for the Auto Industry CPA’s…then I flew home to Atlanta. I spoke in three cities in four days.
In coming weeks I will be speaking to the New York Dealers annual convention, the Utah Dealers annual convention and the Wisconsin Dealers annual conference as well as more than ten additional state conventions already on the books in 2002. In between I will be conducting seminars coast-to-coast as well as dealer 20-groups for the NADA, NCM and MPG. In truth I have been the keynote speaker for more than 27 state dealer conventions in the last two years. So many of you have become close, personal, and lifetime friends.
All of that is wonderful but this year is special. I have been invited to conduct three concurrent session seminars at the NADA Convention in New Orleans. This is the first time I have spoken at the National Convention since 1993. I am asking for your support. Please come to my session, which is titled “Ten Ways to Increase Your Dealership Profits by $100,000 per Month”. Of course I will be hanging around the Dealer Magazine booth with my good friend, Mike Roscoe, but it would mean a lot to me if all of the dealers and my friends in the industry would attend my session. You are cordially invited to show up and support me at the “Big Show”. (Applaud and cheer wildly and loudly) Send me an RSVP by email if you intend to be there.
I appreciate your letters and emails…hope I answered all of them promptly. Swirling the last swallow of Remy-Martin Cognac in my snifter, holding it up to the light, I salute you…the people who have made this adventure possible. Be sure that all of you continue to FAX and email many copies of this article to all of our factory friends and state dealer associations...especially Bill Ford Jr.
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